Brent rebounds as U.S. stock rise triggers spread play

LONDON (Reuters) - Brent (brent.167)crude rebounded from a one-month low below $56 a barrel on Wednesday as traders bought the international benchmark and sold its U.S. rival, after data showed a large increase in U.S. oil stocks last week.

The U.S. Energy Information Administration said U.S. crude stocks rose by 4.5 million barrels, trumping some traders' expectations after an industry report on Tuesday said inventories had posted a small fall.

The increase included a 2.3-million-barrel build at the Cushing, Oklahoma delivery point of the U.S. crude contract, also known as West Texas Intermediate or WTI.

"The fear of global supply glut that sent crude prices to six-year lows continues to hang over the market," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

"We have not seen signs of enough lower production resulting from capital spending and drilling cuts."

Brent for April delivery hit a one-month low of $55.92 a barrel before recovering slightly to trade up 26 cents at $56.66 by 10.53 a.m. EDT. It dropped $2.14, or 3.66 percent, in the previous session.

WTI for April delivery fell 70 cents to $47.59 a barrel, after losing $1.71, or 3.42 percent, on Tuesday.

Brent's recovery was aided by investors playing the so-called Brent-WTI spread, when they buy one benchmark and sell the other. Brent-WTI widened to $9.07 a barrel, expanding after hitting its narrowest point in a month on Tuesday.

Putting pressure on prices, the dollar hit a new 12-year high against the euro on Wednesday, gaining more than 1 percent to trade at $1.0561 against the single currency.

The dollar index has rallied 25 percent since last May, making commodities priced in the greenback more expensive for holders of other currencies.

Russia's crude oil exports are also set to rise this year, Energy Minister Alexander Novak said, despite some expectations of a plunge in production due to lower prices following the crash from above $100 a barrel last year.

Prices took some support from stronger U.S. economic figures. Job openings in the United States in January rose to the highest in 14 years, figures from the Labor Department showed on Tuesday, even as U.S. sales recorded their biggest decline since 2009.

Traders were also watching supply risks in Libya, where two eastern oilfields have been shut following an attack by Islamist militants, an oil official said.

(Additional reporting by Keith Wallis; Editing by Dale Hudson and David Evans)

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